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EOG RESOURCES INC (EOG)·Q3 2025 Earnings Summary

Executive Summary

  • EOG delivered a strong Q3 2025, beating Wall Street on EPS and revenue, driven by higher volumes post-Encino integration and lower unit costs; adjusted EPS was $2.71 vs consensus $2.45 and revenue was $5.85B vs $5.59B. Management underscored $1.4B free cash flow and ~$$1.0B cash returned (dividends + buybacks). *
  • Operating execution exceeded guidance across oil, NGL, and gas volumes, while cash operating costs and DD&A came in below midpoints; Q3 equivalent production was 1,301 MBoed vs guidance 1,293 MBoed.
  • FY 2025 guidance trimmed for tax items (effective rate midpoint 21.5% from 22.5%; current tax expense midpoint $1,020MM from $1,140MM), consistent with tax legislation benefits; capex midpoint held at $6.3B.
  • Strategic momentum: Encino integration tracking to ~$150MM synergies, Utica volumes outperforming, and international Gulf States (Bahrain/UAE) progressing; CEO reiterated multi-basin resilience and active buybacks as a return lever.

Note: Consensus and EBITDA values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Volumes and costs: “Third quarter oil, gas, and NGL volumes exceeded midpoints; lower per-unit cash operating costs and DD&A helped drive outstanding financial results.” — Ezra Yacob (CEO).
  • Cash returns: $545MM regular dividends paid and $440MM buybacks; board declared $1.02/share dividend payable Jan 30, 2026 (annualized $4.08).
  • Encino/Utica integration: COO highlighted rapid efficiency gains, one rig reduction (5→4) while maintaining 65 completions and line-of-sight to ~$150MM synergies in year one.

What Went Wrong

  • GAAP G&A rose QoQ from acquisition-related costs ($68MM), though non-GAAP G&A decreased; GP&T rose QoQ with higher Utica throughput.
  • Commodity mix realization headwinds: NGL realizations as % of WTI fell to 32.7% (vs 35.6% in Q2) and US gas realizations below HH widened vs Q2 (-$0.36 vs -$0.57), partially offset by crude differential stability.
  • Macro caution: Management flagged near-term oil oversupply as spare capacity returns, indicating “no to low” oil growth into early 2026 despite constructive medium-term; tariffs and non-casing steel impacted service costs.

Financial Results

Core financials vs prior quarters

MetricQ1 2025Q2 2025Q3 2025
Total Operating Revenues and Other ($MM)$5,669 $5,478 $5,847
GAAP Diluted EPS ($)$2.65 $2.46 $2.70
Adjusted Diluted EPS ($)$2.87 $2.32 $2.71
Operating Income ($MM)$1,859 $1,747 $1,836
Net Income ($MM)$1,463 $1,345 $1,471

Margins trend (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
EBIT Margin %31.74%*32.81%*33.22%*
EBITDA Margin %49.77%*52.86%*53.82%*
Net Income Margin %24.96%*25.04%*25.59%*

Values retrieved from S&P Global.*

Revenue mix by commodity

Revenue ($MM)Q1 2025Q2 2025Q3 2025
Crude Oil & Condensate$3,293 $2,974 $3,243
Natural Gas Liquids$572 $534 $604
Natural Gas$637 $600 $707

KPIs and cash metrics

KPIQ1 2025Q2 2025Q3 2025
Crude Oil & Condensate (MBod)502.1 504.2 534.5
NGLs (MBbld)241.7 258.4 309.3
Natural Gas (MMcfd)2,080 2,229 2,745
Total MBoed1,090.4 1,134.1 1,301.2
Cash Operating Costs (non-GAAP, $/Boe)10.31 9.94 9.93
Capital Expenditures ($MM)1,484 1,523 1,648
Adjusted CFO ($MM)2,813 2,496 3,031
Free Cash Flow ($MM)1,329 973 1,383

Against Wall Street consensus (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
EPS (Consensus Mean vs Actual)$2.77 vs $2.87$2.20 vs $2.32$2.45 vs $2.71
Revenue ($MM, Consensus vs Actual)$5,851 vs $5,861$5,424 vs $5,371$5,586 vs $5,749
EBITDA ($MM, Consensus vs Actual)$3,155 vs $2,917$2,735 vs $2,839$3,065 vs $3,094

Values retrieved from S&P Global.*
Note: Actuals reflect reported adjusted EPS and total operating revenues and other; EBITDA sourced from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax Rate (%)FY 202520.0–25.0 (Mid: 22.5%) 19.0–24.0 (Mid: 21.5%) Lowered
Current Tax Expense ($MM)FY 2025$1,040–$1,240 (Mid: $1,140) $970–$1,070 (Mid: $1,020) Lowered
Capital Expenditures ($MM)FY 2025$6,200–$6,400 (Mid: $6,300) $6,200–$6,400 (Mid: $6,300) Maintained
DividendNext Pay Date$1.02/share declared (Oct 31 paid) $1.02/share declared (payable Jan 30, 2026) Maintained/Declared
Total MBoedQ4 2025—1,346–1,386 (Mid: 1,366) New quarterly guidance

Q3 results vs Q3 guidance midpoints (selected):

  • Total MBoed: 1,301.2 vs 1,293.3 (beat)
  • Oil MBod: 534.5 vs 532.4 (beat)
  • NGL MBbld: 309.3 vs 305.0 (beat)
  • Cash operating costs (non-GAAP $/Boe): 9.93 vs 10.30 (beat)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q1)Current Period (Q3)Trend
Macro oil/gasCautious near-term oil; 2025 gas inflection; tariffs creating volatility “No to low” oil growth near-term; constructive medium-term; 4–6% CAGR for US gas demand; LNG/power drivers Macro caution persists; medium-term bullish
AI/technologyHiFi sensors and generative AI deployed; >50 wells benefited in H1 Expanded AI and deep learning; real-time drilling optimization, predictive maintenance, safety use cases Scaling across operations
Service costs/supply chainSoftening in non-high-spec equipment; focus on top-tier services Low single-digit spot reductions offset by tariffs; ~45% 2026 services locked Mixed: cost-tailwinds vs tariff headwinds
Delaware Basin productivityAdded landing zones; long laterals; >100% well-level returns Wells performing to design; paybacks <1yr; >100% returns; lateral lengths up >20% YoY Continued improvement
Utica/Encino integrationAccretive acquisition; 5 rigs/3 crews plan; ~$150MM synergies Strong base production; artificial lift optimization on 80% applicable wells; drop to 4 rigs with same completions Ahead of plan
International (Bahrain/UAE)UAE concession; Bahrain JV; exploration ramp First wells in Bahrain; initial UAE spud Q4; legacy wells assumed; early but positive Early-stage execution

Management Commentary

  • “We generated substantial free cash flow of $1.4 billion, which helped support nearly $1.0 billion of cash return to shareholders… As of quarter-end, we have committed to return 89% of our estimated annual free cash flow to shareholders.” — Ezra Yacob (CEO).
  • “We have excellent line of sight to realize our $150 million of synergies within the first year, lower well cost being the primary driver.” — Jeff Leitzell (COO).
  • “Our pristine balance sheet… with nearly $5.5 billion in total liquidity… provides tremendous capacity and flexibility to invest through the cycle.” — Ezra Yacob (CEO).
  • “For the full year 2025, we are forecasting $4.5 billion in free cash flow, a $200 million increase versus our previous forecast at the midpoints of guidance.” — Ann Janssen (CFO).

Q&A Highlights

  • Macro outlook: Goldman Sachs probed oil/gas balances; management expects near-term oil oversupply turning to balanced/undersupplied medium-term; US gas demand structurally supported by LNG and power.
  • Delaware productivity skepticism: EOG emphasized design performance, lower costs, longer laterals, and additional landing zones with <1-year paybacks and >100% returns.
  • Utica differentials/marketing: Differential narrowing expected over time with scale; firm transport provides premium market access for Utica gas.
  • Costs: UBS noted guidance reductions; management attributed to lower workovers/compression, lower GP&T; DD&A lower from reserve additions.
  • Shareholder returns: Return >70% FCF “minimum” reiterated; active buybacks viewed as compelling given sector valuation; flexibility to approach ~90%+.

Estimates Context

  • Q3 beats: Adjusted EPS $2.71 vs $2.45 consensus; revenue $5.85B vs $5.59B; EBITDA $3.09B vs $3.07B — driven by volume outperformance and lower cash costs.*
  • Prior quarters: Q2 adjusted EPS $2.32 vs $2.20; Q1 adjusted EPS $2.87 vs $2.77; revenue roughly in-line to small misses/beats.*
  • Implication: Models likely move higher on production, non-GAAP unit cost improvements, and lower FY tax rate/current tax expense; buyback cadence adds per-share leverage.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Operational beat with Encino synergies: Higher Utica volumes and lower unit costs supported beats; integration ahead of plan with visible ~$150MM synergy capture.
  • Cash return durability: $1.4B Q3 FCF, ~$1.0B returned; dividend declared $1.02 and active buybacks signal confidence amidst macro uncertainty.
  • Cost profile improving: Non-GAAP cash operating costs declined to $9.93/Boe; DD&A lower on reserve adds; supports margin resilience even with NGL/gas realization volatility.
  • Macro stance: Expect cautious oil allocation near-term; gas strategy levered to LNG/power demand and Dorado’s low-cost profile; 2026 set-up constructive.
  • FY 2025 tax guidance downshift: Effective rate and current tax expense midpoints reduced; tailwind to FCF and EPS.
  • International optionality: Early Bahrain/UAE progress adds multi-year growth vectors; early days but complements multi-basin resilience.
  • Trading implications: Near-term narrative anchored in execution beats, buyback activity, and tax tailwinds; watch Q4 guidance adherence and Utica differential improvements as incremental catalysts.

Appendix: Additional Data Points

  • Q3 hedges: Mark-to-market hedge gains increased GAAP EPS; net cash received for settlements of $27MM.
  • Balance sheet: Cash $3.53B; long-term debt $7.67B post-Encino; net debt-to-total capitalization (non-GAAP) 12.1%.
  • Dividend history: “EOG has never suspended or reduced its regular dividend.”